Correlation Between Wanhua Chemical and Epoxy Base
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By analyzing existing cross correlation between Wanhua Chemical Group and Epoxy Base Electronic, you can compare the effects of market volatilities on Wanhua Chemical and Epoxy Base and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Wanhua Chemical with a short position of Epoxy Base. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wanhua Chemical and Epoxy Base.
Diversification Opportunities for Wanhua Chemical and Epoxy Base
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wanhua and Epoxy is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Wanhua Chemical Group and Epoxy Base Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Epoxy Base Electronic and Wanhua Chemical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Wanhua Chemical Group are associated (or correlated) with Epoxy Base. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Epoxy Base Electronic has no effect on the direction of Wanhua Chemical i.e., Wanhua Chemical and Epoxy Base go up and down completely randomly.
Pair Corralation between Wanhua Chemical and Epoxy Base
Assuming the 90 days trading horizon Wanhua Chemical Group is expected to under-perform the Epoxy Base. But the stock apears to be less risky and, when comparing its historical volatility, Wanhua Chemical Group is 2.8 times less risky than Epoxy Base. The stock trades about -0.34 of its potential returns per unit of risk. The Epoxy Base Electronic is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 574.00 in Epoxy Base Electronic on October 25, 2024 and sell it today you would lose (11.00) from holding Epoxy Base Electronic or give up 1.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wanhua Chemical Group vs. Epoxy Base Electronic
Performance |
| Timeline |
| Wanhua Chemical Group |
| Epoxy Base Electronic |
Wanhua Chemical and Epoxy Base Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wanhua Chemical and Epoxy Base
The main advantage of trading using opposite Wanhua Chemical and Epoxy Base positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wanhua Chemical position performs unexpectedly, Epoxy Base can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Epoxy Base will offset losses from the drop in Epoxy Base's long position.| Wanhua Chemical vs. Zijin Mining Group | Wanhua Chemical vs. Baoshan Iron Steel | Wanhua Chemical vs. Rongsheng Petrochemical Co | Wanhua Chemical vs. Inner Mongolia BaoTou |
| Epoxy Base vs. Zijin Mining Group | Epoxy Base vs. Wanhua Chemical Group | Epoxy Base vs. Baoshan Iron Steel | Epoxy Base vs. Rongsheng Petrochemical Co |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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